|
Global crossing { August 10 2002 } Original Source Link: (May no longer be active)
http://www.washingtonpost.com/wp-dyn/articles/A959-2002Aug9.htmlhttp://www.washingtonpost.com/wp-dyn/articles/A959-2002Aug9.html
Firms to Buy Majority Of Global Crossing
By Anitha Reddy
Washington Post Staff Writer
Saturday, August 10, 2002; Page E01
The Asian conglomerates Hutchison Whampoa Ltd. and Singapore Technologies Telemedia Pte. will buy a majority stake in Global Crossing Ltd. for $250 million after it emerges from bankruptcy proceedings, the companies said yesterday.
The amount is only a third of what the two companies offered when Global Crossing filed for Chapter 11 bankruptcy protection in January and a trifle compared with the fiber-optic-network company's $12 billion in debt.
The two companies will own 61.5 percent of the reorganized firm. Banks will receive 6 percent of the equity, plus $300 million in cash and $200 million of new debt in the form of senior notes. Unsecured creditors will be awarded the remaining equity. Current shareholders will get nothing.
"Global Crossing presents an attractive business prospect for Hutchison and our investment in the company, which owns substantial broadband network capacity, is in line with our vision to be a leading global telecommunications player," Canning Fok, group managing director of Hutchison Whampoa, said in a news release.
"This is a textbook model for a successful strategic investment," John J. Legere, chief executive of Global Crossing, said in a news release. He said the two companies have skills that complement his firm's global network.
Hutchison Whampoa's holdings include not only telecommunications, but also ports, real estate, retail, manufacturing, energy and infrastructure. About half of its stock is held by Cheung Kong Holdings Ltd., a massive company owned by Hong Kong tycoon Li Ka-shing.
Singapore Technologies is a telecommunications company owned by that country's government.
Global Crossing's investors and creditors rejected an earlier $750 million bid by the two companies, mainly because it left only crumbs for debt-holders. Under that deal, Hutchison and Singapore would have paid for a 79 percent stake.
The company had previously considered selling its British network, conferencing division, and undersea cable-laying and maintenance unit in pieces, but it was disappointed by smaller-than-expected offers.
Global Crossing spent billions over the past four years building a high-speed fiber-optic cable network on the ocean floor that links 200 major cities worldwide.
The company is under investigation by the Justice Department, the Securities and Exchange Commission and Congress for allegedly "swapping" network usage rights with other companies to artificially pump up revenue.
Global Crossing's legal headquarters are in Bermuda, but its operations are run out of offices in California and New Jersey. Its bankruptcy case is the fourth largest in U.S. history.
A bankruptcy court judge in the Southern District of New York approved the sales agreement yesterday. The companies expect to pass regulatory hurdles and complete the deal in early 2003.
© 2002 The Washington Post Company
|
|
